Enbridge To Double Capacity in the Bakken?

This is too important an item to be buried in a longer post, so I will re-post it here:

Enbridge is working on plans to further double the company's pipeline export capacity in North Dakota. Since the news had not been announced, the spokesman couldn't elaborate on the projects, except to say that the projects, once completed, would further double Enbridge's export capacity in North Dakota. While she couldn't get into specifics, she hinted that expansion activity could center around the Beaver Lodge Station south of Tioga, North Dakota (USA). -- Tioga Tribune Supplement, July, 2010.

Takeaway capacity should meet production demands for the next year or so, based on frequently presented data (in almost every major Bakken corporate presentation). The railroad tankers are scalable, but more costly, and can make up the delta if necessary until more pipeline is laid.

But if Enbridge doubles its export capacity, takeaway capacity should be more than adequate. It sounds like Enbridge is going to move sooner than later on this project.

Tioga Paper Supplement: Celebrating Oil Day

Download and enjoy. A supplement to the Tioga Tribune to celebrate Annual Oil Day in Tioga.

Even seasoned investors can learn a few new things in what looks simply like an advertising supplement. for example:

Page 6, under the photo: Enbridge is working on plans to further double the company's pipeline export capacity in North Dakota. Since the news had not been announced, the spokesman couldn't elaborate on the projects, except to say that the projects, once completed, would further double Enbridge's export capacity in North Dakota. While she couldn't get into specifics, she hinted that expansion activity could center around the Beaver Lodge Station south of Tioga, North Dakota (USA).

Page 8: huge story on Continental Resources, which I think is the "LA Lakers" of the oil industry in North Dakota.  That would make Harold Hamm the "Phil Jackson" of the operators in the Bakken. The article notes that CLR has 21 rigs operating in North Dakota, which is the most of any operator in the state.  (The article was based on an interview with Jeff Hume; see comments below; I referenced "Harold Hamm" in the original post; I have since corrected those references to Jeff Hume per the author of the original article.)

• Jeff Hume noted that the Nesson Anticline is the backbone of the Bakken.
• CLR currently has three rigs drilling Eco-Pads, and will have six rigs drilling on Eco-Pads by the fourth quarter of this year, with two or three of them in the Tioga area.
• A reminder that CLR increased CAPEX for 2010 to $1.3 billion; and expanded its bank credit faciltiy to a maximum of $2.5 billion. "However, the increased bank financing might be seen as a temporary measure."
• CLR is exploring ways to continue funding operations (interesting).
• CLR now has over 800,000 net acres in the Bakken.
• Jeff Hume expects to be in the Tioga area for the next 15 - 20 years. 

Page 9: Hess is currently producing about 14,000 barrels of oil/day in the Bakken, and plans to bost that to 80,000 in the next five years. Hess has a $4 billion annual CAPEX program (compare to CLR above).

• Hess noted that production generates a profit margin of 10 percent with a West Texas intermediate crude price of $40. (That explains an earlier cryptic/vague comment by a Hess spokesman. This is the most precise information I've seen Hess provide.)
• And if seasoned investors had not heard of Hess's Paris Basin play in France until now, they can credit the Tioga Tribune supplement.

Page 11: Full page on article detailing the risk to the Bakken-- federal regulation. Bottom line: "The Bakken is dead if they stop fracking." Downright scary. I think the writing is on the wall. For investors, the price of oil would certainly trend higher -- but natural gas would probably double or triple overnight -- the US is swimming in natural gas but only because of fracking. So, the more production these companies have on line before fracking is halted, the better prepared they are for any contingency. I think that's one of the biggest drivers for companies to expedite their drilling programs. Get the wells drilled; move elsewhere for two to three years while the federal frac rules are implemented (unless Feds allow fracking to continue while new rules are implemented); and then move back in when rules in place. (Some of this is my personal opinion; some of this has been shared by experts in the field.)

137 Active Rigs in North Dakota

New record for active rigs in North Dakota: 137.  It was 136 earlier today; this evening NDIC is reporting 137 active rigs in North Dakota.

For the Record: BTA Wells Are Now Sequels; URSA Resources With New Permit

In today's daily activity report, July 21, 2010, it appears all of the wells operated by BTA Oil Producers, LLC, have been acquired by Sequel Energy, LLC. This is the first time I have heard of Sequel.

In addition, a relatively uncommon name in the Bakken, URSA Resources Group, LLC, has been granted a permit, #19205, in Pierre Creek oil field, McKenzie County; it will be a long lateral.

Newfield Has Another Good Well in Sand Creek Oil Field

Newfield reports another good well in Sand Creek. This follows two other good Newfield wells in Sand Creek.

This one is the Garvey Federal 1-29H, 29-153N-96W, McKenzie County, with an IP of 2,825, file #17811 -- a permit that was granted November 17, 2008.

Newfield is very exciting and a company I completely missed: see my original discussion regarding Newfield for some interesting tidbits. Its ticker symbol is NFX (looks like Netflix?) and has a market cap of $6.7 billion. Without this blog I would have completed missed NFX; as it is, I wish I had paid attention a bit earlier. It seems to be in natural gas as much as oil, and thus another company to follow closely if natural gas ever catches on. 

Newfield has three or four active rigs in North Dakota at any given time and had a great first quarter, 2010, conference call.

Coincidentally Newfield released its mid-year operational update today:

• 2010 domestic oil production to grow nearly 30% over 2009
• Bakken production will see 60% growth; previous guidance was 40%
• Newfield added a four rig last week (mid-July, 2010)
• Newfield has drilled 13 wells so far this year; expects to drill 18 more the rest of the year
• The Garvey Federal had an initial flow of 2,500 boepd (two years ago this would have been a headline, front-page story; now it's expected in the Bakken with multi-stage fractures)
• Will do more long laterals; wells cost $6 - $8 million; EURs of 500,000 to 750,000 bbls, in line with estimates of other Bakken companies

Sand Creek oil field is about 15 miles due west of the Sanish, not far from some other good fields in the immediate area benefiting from the Westberg Anticline

For those keeping track, these are some of Newfield's recent wells (the year in parentheses is when the permit was granted):

• 17878, Harold 1-31H, 2,194 (2008)
• 17919, Clear Creek Federal 1-25H, 2,360 (2008)
• 17808, Rolfsrud 1-29H, 2,551 (2008)
• 17811, Garvey Federal 1-29H, 3,816 (2008)
• 18413, Heidi 1-4H, 1,231 (2009)
• 18689, Bluefin 1-13H, 2,497 (2010)
• 18626, Gladys Federal 2-9H, 3,631 (2010)
• Newfield's two most recent wells, including the Garvey Federal, were short laterals